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Investing in a polarised world

Russell Napier, financial historian and Keeper of the Library of Mistakes, explains why investors should brace for long-term inflation
Investing in a polarised world

Professor Russell Napier set up Edinburgh’s ‘Library of Mistakes’ in 2014 to counter historian James Grant’s famous quote “Progress is cumulative in science and engineering, but cyclical in finance”. Aware of the scale of the challenge, Napier knows he won’t succeed in changing that, but says he will be content if the institution can make the accumulation of knowledge even “slightly better”.  

This might resonate with those who have lived through periods of high inflation and question the laissez faire attitudes of those who haven’t. Napier, who advises on asset allocation for institutional investors, believes that we have a long period of elevated inflation ahead of us, and that this is effectively controlled by government policy.

When the pandemic struck in 2020, the UK government partially guaranteed commercial loans made by the banking system, knowing that some of them wouldn’t be repaid and some of them would be maintained fraudulently. “I’m having a real problem convincing the marketplace of this but in my opinion that means the government now runs monetary policy, not the central banks,” Napier says. 

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